City workers will get about a 10 percent raise over 32 months and be allowed to live outside the city under a new contract reached with the Bloomberg administration.

The contract covers clerical, school, hospital and white-collar employees represented by District Council 37, the city’s largest municipal union.

Under the deal, workers get a 3.15 percent pay hike for the first 12 months of the contract, retroactrive to July of last year.

They get a 2 percent raise for the next seven months and then a 4 percent increase through February of 2008. A source said the mayor has agreed to waive the rule requiring municipal workers to reside in the five boroughs.

Like firefighters and cops, they will be allowed to live in Nassau, Suffolk, Westchester, Rockland, Putnam and Orange counties.